@Walter Hinteler,
When enough people recognize this "Palestinian state", Israel needs to respond by finishing the Security Fence (especially around Jerusalem and in other areas where Israel has so far been pressured not to complete the Fence), and by declaring the Security Fence as Israel's official border.
Any whining and histrionics from the freaks can be deflected by pointing out that, if a hostile Palestinian state is going to be created next to Israel, then Israel needs to have a defined and secure border with that hostile Palestinian state.
West of the Security Fence, Israel should annex all land into the state of Israel, as all such land will at that point be encompassed within Israel's official border. Control over the annexed land can be cemented by fully developing the E-1 Area into one of Jerusalem's suburbs.
East of the Security Fence, Israel should seize full military control over all of Area B, leaving the Palestinians with
Area A alone to form their state with.
The Palestinian state should not be allowed to come into being with any West Bank land other than Area A.
If, in the future, the Palestinian state ever decides that they are willing to make peace with Israel, then they can be offered further land east of the Security Fence beyond Area A, in exchange for their peacefulness.